Our retail research team has created 3 stock lists, namely Growth, Value and Yield.
|The Growth List comprises of small-mid capitalisation companies with business catalysts which will potentially grow their earnings in the near future. The Growth portfolio would be suitable for investors looking for higher returns and are willing to tolerate the risk of higher short-term volatility of stock prices.|
|The Value List focuses on companies which are undervalued based on their share prices as compared to the company fundamentals. It would be suitable for conservative investors who prefer price stability and have a longer investment horizon.|
|The Yield List comprises of stocks that provide consistent dividend pay-out. It would be suitable for investors whose primary focus is to gain regular dividend income from their investments.|
February Market Overview
The Singapore market ended Feb on a very weak note with the STI dropping 4.5% after US stocks suffered its sharpest correction in the last week of the month since the 2008 global financial crisis as the worldwide spread of the coronavirus intensified fears over its impact on the global economic growth and corporate earnings.
Ytd, the STI incurred a total loss (including dividends) of 6.1%. On an equal weighted basis, the average loss of the 30-constituent index was 8.2% with only four stocks chalking up single-digit gains, led by the defensive yield plays, such as REITs and ST Engineering.
In contrast, half of the index stocks were hammered by more than double-digits with travel/tourism-related counters such as SATS (-20.4%), ComfortDelgro(-18.1%), SIA (-11.5%) and Genting (-11.4%) all hard hit.
Not surprisingly, Market Insight's Growth, Value, Yield (GVY) basket of stocks retreated by an average 5.8% ytd although it managed to outperform the benchmark index by 2.4 percentage points.
Growth List -5.3% YTD
Despite our technology-heavy exposure, the Growth portfolio was partly buffered by ST Engineering given its strong defensive attributes as the group secured $1.5b of new contracts in 4Q19. This took its order book to $15.3b (3Q19: $15.9b), of which $5.9b will be delivered in 2020, thus providing near-term revenue visibility.
Value List -6.6% YTD
While all three companies had reported decent 4Q19 results, CapitaLand recently closed all four of its malls in Wuhan as well as both malls in Xi’an and will reopen when local authorities permit in view of the Covid-19 outbreak.
Likewise, Koufu also guided that the F&B industry is currently fraught with challenges, which impacted the business of the group’s food courts especially at Sands Cotai, Macau and Marina Bay Sands, Singapore which are largely patronised by tourists.
Yield List -6.1% YTD
Valuetronics is our biggest loser in the Yield basket due to a delay in resumption of its production back to pre-CNY levels as some of the workers are unable to return to work due to various control measures and travel restrictions imposed by the government to curb the spread of Covid-19..
However, its production will not be fully exposed to the impact of Covid-19 in China as its Vietnam plant has begun shipments to the US market in Jun last year and another leased facility (4,000 sqm) will commence operations by 1Q20.
MKE believes that Valuetronics should see a V-shaped recovery in sales if the Covid-19 outbreak is under control and travel restrictions within China eases, noting that the adverse effect on sales is due to a natural supply shock rather than a change in company fundamentals.
Note: * Priced in USD
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